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Retirement and Taxes: How to Maximize Your Savings

Not all retirement savings
vehicles are taxed the same way.

So much of the retirement advice you hear is focused on how much to save and what to invest in. But if you're a truly smart saver, you'll also pay attention to how your savings and investments are taxed, both now and in the future. That way, you can help maximize your retirement income while minimizing what you owe to the government.

Part of this retirement and taxes strategy will likely include putting your money in various types of retirement accounts or investment vehicles that are taxed differently. The thinking behind this is similar to why you might diversify across a variety of stocks and bonds in your portfolio: Because you're not putting all your eggs in one basket, you're better able to minimize losses if one type of investment experiences a downturn.

In much the same way, by not relying on just one type of retirement savings vehicle, you're not limiting yourself to one type of tax treatment — and thus have more flexibility to take advantage of the features, benefits and tax characteristics different types of retirement vehicles can offer. The more options you have, the more strategic you can be in your retirement planning and ultimately help minimize your tax bite.

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Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company and its subsidiaries. Life and disability insurance, annuities, and life insurance with long-term care benefits are issued by The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM). Long-term care insurance is issued by Northwestern Long Term Care Insurance Company, Milwaukee, WI, (NLTC) a subsidiary of NM. Securities are offered through Northwestern Mutual Investment Services, LLC, (NMIS) a subsidiary of NM, broker-dealer, registered investment adviser, member FINRA and SIPC. Fiduciary and fee-based financial planning services are offered through Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI, a subsidiary of NM and a federal savings bank. Products and services referenced are offered and sold only by appropriately appointed and licensed entities and financial advisors. Not all products and services are available in all states. Not all Northwestern Mutual representatives are advisors. Only those representatives with the titles "Financial Advisor" or "Wealth Management Advisor" are credentialed as NMWMC representatives to provide advisory services.